New EU-wide debit scheme unveiled
A new EU program lets companies and individuals make standardised monthly euro payments in 32 countries from a single bank account.Frankfurt -- From November 2, Polish nurses in Ireland will be able to pay for their families' cell phone bills by direct debit back home under a new payment system Europe hopes will be a major step in its quest towards a true single market.
The move is the result of work on a debit scheme that one study says has a potential market of 123 billion euros (180 billion dollars).
The European Central Bank (ECB) unveiled Monday details of the Single Euro Payments Area (SEPA) direct debit programme that starts on November 2, letting companies and individuals make standardised monthly euro payments in 32 countries from a single bank account.
Beneficiaries include mobile phone companies, energy or telecommunication suppliers, petrol station chains and individuals with monthly payments who should find the process easier and cheaper if market competition is spurred as the ECB hopes.
For example, a Polish nurse working in Ireland could have a mobile operator in Warsaw debit a Dublin account each month to pay her elderly mother's cell phone service.
Some 2,500 participating banks will offer the service in November and all European banks must make it available within a year, ECB officials said.
The 27-member European Union is slowly fine-tuning a single market with gross domestic product of 2.940 trillion euros but is hampered by 27 national payment systems that run up costs and make it harder to do business.
SEPA's ultimate goal is to provide a complete range of payment options throughout the EU and five neighbouring states.
The direct debit project is "a major second milestone" after a programme to standardise credit transfers was initiated in January 2008, ECB board member Gertrude Tumpel-Gugerell said.
"This is one area where Europe has woken up," she added in reference to an exhortation last week by the British magazine The Economist.
Still ahead are pan-European debit cards that have proved hard to establish and new instruments such as e-invoicing or mobile phone-based payments.
A study by the consulting group Capgemini said SEPA has a market potential of up to 123 billion euros over six years.
ECB officials hope SEPA credit transfers and direct debits will spur cross border competition and encourage banks to innovate further, reducing costs and streamlining business operations.